Email this article to a friend

Senior executives at CVC Capital Partners are set to share a Â£70m (â¬102m) windfall from the planned Â£800m sale of Kwik-Fit, the car parts retailer.

The private equity firm last week appointed Deutsche Bank to sell Kwik-Fit, in what is expected to be a trade sale or secondary buy-out.

A sale at £800m would value Kwik-Fit at about 10 times last year’s earnings before interest, tax, depreciation and amortisation, and would generate a £350m capital gain on the 70% stake held by CVC. Investors in CVC’s $4bn third fund, which was raised in 2001, would receive £280m, and the remaining 20%, or £70m, would be shared among senior executives at the buy-out firm.

CVC acquired Kwik-Fit in 2002 for £350m from Ford, the US car giant, and is understood to have financed the buy-out with debt, a vendor loan from Ford and £100m of equity. Ford retained a 20% stake in the business, having acquired it for £1bn in 2000. Kwik-Fit’s management was given a combined 10% stake.

CVC has 14 partners across its European network of offices, but profits from successful portfolio company realisations are paid through a hybrid carry scheme.

About half the profits from each deal are shared by the members of the investment team who worked on the transaction. Some of the profits are divided through a pool that is shared by the firm’s 55 investment professionals. The remainder is paid pro rata to the 14 shareholding partners in CVC’s management company.

Profits from the sale of Kwik-Fit, which is expected to complete later this year, will only be paid out at the end of the seven to 10-year life cycle of CVC’s third fund. Any profits have to take into account provisions or losses relating to other portfolio companies in the fund. CVC declined to comment.